| | from Al Frank's Prudent Speculator Hotline---
For those seeking a relatively new chip-stock name, we offer Mattson Technology (MTSN - $10.09) as tonight’s Hotline Special. Mattson is a leading supplier of advanced process equipment used to manufacture semiconductors. The company's products include strip, etch, deposition, rapid thermal processing and Epi systems. Given the carnage in the technology sector in general over the past months it is not surprising to see MTSN hovering near its 52-week low, and the company's second quarter results, announced last week, certainly were nothing to write home about. Though revenues increased to $82 million from $44 million in the year ago period, the figure was aided by recent acquisitions. Earnings fell to a loss of $0.74 for the quarter, compared to income of $0.13 last year. Commenting on the numbers, MTSN CEO Brad Mattson said, "We, similar to other semiconductor equipment suppliers, have experienced a significant decline, not only in shipments but also in bookings, during the second quarter of 2001, as a result of the economic downturn experienced by our customers. This contraction has hit us especially hard since we recently acquired substantial production facilities as part of our merger with CFM and STEAG." The company is continuing its restructuring and cost reduction efforts (including reducing executive pay, shortening workweeks and reducing headcount) while outsourcing some low volume product lines in order to improve manufacturing efficiencies. However, the worst does not appear to be over for the company, as Mr. Mattson is anticipating third quarter (ends 9/01) revenues to be down 10% to 20% from the second quarter. We believe the worst may be over for the stock, however, as it has tumbled from a 52-week high of $23 to hover around $10. Because MTSN has a nice balance sheet, with a current ratio of almost 2 to 1 and little long term debt, we think that a purchase is warranted, especially as the current Price to Book Value ratio is less than one and the Price to Sales ratio is 1.5, very low figures for a chip-related company at or near the trough of a cyclical downturn. We think the shares could fetch as much as $21 once the inevitable turnaround occurs. Better to be early than late so we would look to buy MTSN at prices below $10.50. |
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